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The big day has arrived – our first book is officially out and can be purchased at Amazon.com (Borders and Barnes & Noble still show the old release dates for some reason).

Needless to say that this  is a moment that I am very proud off.

Over the next couple of weeks and months, I will write about some of the principles that we developed as part of the book. Many of those posts will be repeat topics as I tested a lot of those concepts as we were writing the book.

The writing of the book and the sense-making that came with it has had a profound impact on my thinking – so deep in fact, that I am repositioning my company around it. I had hoped to re-launch my business before the book was out, but that was preempted by the early release of the book by Amazon. Stay tuned for an update on that in a few weeks.

The book has three parts to it. The first part deals with the fact that if you want to understand this current wave of innovation – powered by social media, social computing, or social networking - you are in fact better off understanding what we termed the Human 1.0, which has been around for tens of thousands of years, rather than the Web 2.0 tools. We describe the main elements of the Human 1.0, including reciprocity, our innate sense of fairness, our need to look cool and to attain status and power, and other human quirkiness that can explain a lot of what is happening in business today.

The second part of the book deals with the fact that companies that are successful in harnessing the power of Social Media, Communities, or the Web 2.0, think differently about their business and they act differently. They focus on Tribes and Knowledge Networks instead of the more traditional Market Segments and Information Channels, and they are human-centric to a fault, ditching the old company and product-centricity.

The third part of the book talks about what successful companies actually do differently: they turn all their business processes into social processes and they embrace the messiness that comes with the social. In our research we have found examples of companies turning every business process into a social process except two – finance and legal.

I have not frequently asked for help, and have focused most of my work on this blog on providing value. Today I will ask for your help. Please buy the book, help promote it if you like it, and help us develop a better second book. Here are some ways in which you could help:

• Buy the book – for now the best way is on Amazon.com – http://amzn.to/9hRSok
• Become a fan of our Hyper-Social organization fan page on Facebook – http://www.facebook.com/hypersocialorg
• Sign up for our upcoming webinar about the book – https://www1.gotomeeting.com/register/558348201
• Leave us comments, write reviews, and let your friends know.

We have many more endorsements of the book, but for now I will leave you with what Barry Judge, Chief Marketing Officer for BestBuy had to say: “To the extent that we can be human with what we know, and share it as freely as we possibly can, we’ll go a long way towards gaining a higher or stronger level of trust with our consumers. The authors of the Hyper-Social Enterprise not only explain why that happens – they also provide a roadmap for how to embed it in all your customer-facing processes.”

THANK YOU!

About a year ago I wrote about the fact that people have two evaluation frameworks – a market framework and a social framework – and how rewards are not a good idea when looking for community feedback on products.

Authors Ori Brafman and Rom Brafman, in their latest book Sway: the irresistible pull of irrational behavior, describe a research project at the National Institutes of Health (NIH), that confirms the same paradox through neurophysiology.

The NIH researchers placed participants in an MRI machine fitted with a monitor and a joystick to allow the subjects to play a game. At the beginning of each game a circle, a square, or a triangle would appear on the screen. A circle meant that if you succeeded in completing the upcoming task – zapping a figure as it appeared on the screen – you’d earn a monetary reward. Different circles meant different size rewards. A square meant that if you failed to zap the figure you had a penalty of either 20 cents, $1, or $5. A triangle meant that no money was on the line.

When the researchers monitored which part of the brain was active in the various stages of the game they found that every time a circle or square appeared, that is every time there was money to be gained or lost, the pleasure center of their brain lit up – the same center that is associated with the high that results from drugs, sex, and gambling, and which can result in addiction. When triggered, that part of the brain releases dopamine that creates the feeling of contentment and ecstasy – and as addicts will tell you, you need increasing doses of dopamine to achieve the same result over time.

In a separate study, subjects were asked to play the same game, but instead of making or losing money, the participants were told that the better their score, the more money would be donated to charity. Now the MRI revealed that the pleasure center was completely quiet, but instead the “altruism center” of the brain lit up. That is the part of the brain responsible for social interactions – how we perceive others, how we relate, how we form bonds.

The book also describes other case studies of people evaluating things in either their social framework or their market framework. A fascinating one is when the Swiss government was looking for places to dump nuclear waste after World War Two. When they selected two towns and tried to convince the town members to take one for the team by accepting to live near a nuclear dump, 50.8 percent of the voters agreed with it. Thinking that this was still too much opposition, the government instead offered a monetary reward to live next to the dump – the equivalent of $2,175/year. What happened is that after the monetary reward was offered, only 24.6 percent of the population agreed with it. And when the government upped the reward to $4,350 and then $6,525 per year, only one voter changed his mind.

This all proves that using rewards is really bad for marketing. People get addicted to it and they expect it in increasing quantities. This also explains why the SAP developer community had some bullying in the community when they offered individual rewards, and how that all went away when they changed the program so that the overall number of points within the community triggered a donation to a charity.

I have been enjoying the book Buyology: Thruth and Lies About Why We Buy, which is based on a three-year neuromarketing study that involved brain scans of 2,000 volunteers from all over the world.

The book is a great read and describes some amazing findings – like the fact that the cigarette warnings on cigarette packages and ads may in fact be the killer marketing tool for cigarette manufacturers, as it induces craving for smoking in smokers.

Another finding is that we tend to lie to market researchers – not consciously, it’s just that our unconscious mind is better at interpreting our behavior (including why we buy)  than our conscious mind. Needless to say that this finding spells disaster for the market research industry, on which companies spent $12 billion in 2007 in the US alone.

And if you thought it was getting harder to reach people with your advertising, check out the following passage:

By the time we reach the age of sixty-six, most of us  will have seen approximately two million television  commercials. Time-wise, that’s the equivalent of  watching eight hours of ads seven days a week for six  years straight. In 1965 a typical consumer had a 34  percent recall of those ads. In 1990, that figure had  fallen to 8 percent. A 2007 ACNielsen phone survey of  one thousand consumers found that the average  person could name a mere 2.21 commercials of those  they had ever seen, ever, period.1 Today, if I ask most  people what companies sponsored their favorite TV  shows—say, Lost or House or The Office—their faces go  blank. They can’t remember a single one. I don’t blame  them. Goldfish, I read once, have a working memory of  approximately seven seconds—so every seven  seconds, they start their lives all over again. Reminds  me of the way I feel when I watch TV commercials.

Yikes…

The book also describes the importance of mirror neurons on buying behavior, the importance of “cool” on genetic survival, and much more…maybe I’ll have a few more posts on the topic in the near future.

In reading the book The Happiness Hypothesis by Jonathan Heidt I came across an important element that makes ultrasocial societies work – reciprocity.

Heidt defines ultrasociality as: living in large cooperative societies in which hundreds of thousand of individuals reap the benefits of an extensive division of labor. Only four instances of ultrasociality are in existence – among hymenoptera (ants, bees and wasps), termites, naked mole rats, and humans. In all species but humans the force that makes that possible is the genetics of kin altruism. In an ants nest or a bee nest, everybody is brother and sister, and since you have as much genes in common with your siblings as you have with your children, the evolutionary drive to leave surviving copies of your genes makes those ultrasocial communities work – shared genes equals shared interest.

In societies that are not structured like bee or ant colonies, the shared set of genes that you have with others drops off rather dramatically – while you share 50% of the genes with your children and siblings, you only share 1/8 the genes with your cousins, and 1/32 with second cousins. In a strictly Darwinian calculation, you would only spend as much energy to save 4 of your cousins as you would for 1 child or brother. That is why kin altruism explains only how groups of a few dozen, or perhaps a hundred, animals can work together. The rest would be competitors in the Darwinian sense.

So what happened to human societies? How did we get fictitious families, like the Mafia, where there is no real kinship, even though they talk about the Godfather and being part of the “family”, to work as ultrasocial societies? It’s the old fashioned “you scratch my back and I’ll scratch yours” phenomenon – which is in fact a mindless and automatic reciprocity reflex. if someone receives a favor, that person will be driven to repay that favor – not because it the proper thing to do – but because it is a built-in ethological reflex. It’s tit-for-tat, hardwired in our brains, that opens the possibility of forming cooperative relationships with strangers. Now mind you that tit-for-tat can only explain the existence of social groups up to a few hundreds. What allows larger social groups is its co-existence with vengeance, gratitude and gossip as tools that reduce the payoff to cheaters by the cost of making enemies.

Those very primitive hardwired human behaviors confirm a lot about what makes online communities work as well – the importance of reputation, the importance of self-organized posses to police communities, the importance of helping one another as a currency, and the failure of communities where reciprocity is not an integral component of the community.

[photopress:irrationalsm.jpg,full,alignright]That is the question that MIT professor in behavioral economics Dan Ariely tries to make his readers think about in his new book, Predictably Irrational: The Hidden Forces That Shape Our Decisions, as he proves that most people are indeed predictably irrational.

Take the following experiment as an example. In the experiment, students were introduced to six products – two different wine bottles, a trackball, a wireless keyboard and mouse, a design book and a box of Belgian chocolates. Students were then given a form that listed all the items and asked to write the last two digits of their social security on top of the form and also next to each item in the form of a price. So, if someone’s last two digits was 23, they were asked to put $23 next to each item on the form. Next they were asked whether they would pay that price for that item with a simple yes or no. When the students finished that, they were asked how much they would be willing to bid for each item. Well guess what? The students with the highest-ending social security digits (from 80-99) bid highest, while those with the lowest-ending numbers (0-20) bid lowest. In the case of the cordless keyboard, the top 20 percent bid an average of $56, while the bottom 20% were willing to pay an average of $16. Overall the top 20% were willing to pay prices that were 216 to 346 percent higher than those of the students with social security numbers ending in the lowest 20%.

And that is just one of the many examples given in Prof. Ariely’s book.

So what does this all mean? As an economist, Ariely believes that fundamental economic principles like the one where supply and demand determine pricing, or the claim that free markets and free trade benefit everyone involved in those transactions, may in fact be bogus. The first one is based on the assumption that the supply and demand forces are independent from one another. The second is based on the assumption that all players in the market know the value of what they have and the value of the things they are considering getting from the trade. But if our choices are affected by random initial anchor prices as demonstrated in the experiment above as well as other experiments listed in the book, then the price that I am willing to pay (demand) can be heavily influenced by the supply side through MRSP (manufacturers suggested retail price), promotions, discounts, etc. So it is not the consumers’ willingness to pay that influences the market price, but instead the market prices themselves that influence the consumers’ willingness to pay. And for the same reason, the choices and trades we make in free markets may not at all reflect the true benefit that we would derive from the things we trade.

So what does that mean from a marketing perspective? For starters, and as it relates to pricing, it means that marketers may in fact have more control over buying behavior than they are currently given credit for. Additional research described in the book as well as on Ariely’s web site and blog, indicates that marketers may in fact be able to influence much more than the price a consumer is willing to pay for something, but also influence their general buying preferences.

In the end, the consumer may not be as much in charge as you think…

You cannot predict consumer purchasing by looking at buying behavior from an economist point of view. Their way of abstracting the buying behavior as that of a rational individual driven primarily by personal needs, instead of looking at it from the complex social web perspective in which we actually make buying decisions, is just not realistic. As with many complex systems, you cannot understand, nor predict, a large social group’s buying behavior by abstracting the individual members of that group and studying their individual buying behavior as if they were rational players who are not influenced by their environment and the behaviors of others.

An interesting book covering this topic, which happened to be my first Kindle purchase, is : The World of Goods: Towards an Anthropology of Consumption. Authored by Mary Douglas and Aron Isherwood – it nicely contrasts the anthropological way of looking at consumption with the economic view.

A good example is to imagine what a small island might look like if it were promoted as a luxury retreat. What kind of stores would you expect, what kind of display/status purchases would people make, etc. Now imagine that same island, with the same people, after a natural disaster, or as they are all getting older, and now influenced by a deep religious movement. The whole island would look differently, people would buy differently, the type of stores that would be there would be different, etc. That is not something you would be able to predict based on the individuals.

Communities impose constraints on the individual members of that community. In some communities it is not ok to buy certain things – think buying fur coats in green communities. In other communities, people will buy stuff to exclude others from their community – think high roller communities who will make you feel bad if you don’t have your own jet, or a biker community if you do not have all the appropriate paraphernalia.

As the authors of the book suggest – “the collapse of a community frees individuals, and thereby affect inflation, spending and saving.”

Now isn’t this exactly what just happened with the mortgage market meltdown? In the past you would have bought your mortgage from a local banker, or a community member you knew. Part of the buying behavior would have been influenced by the community, which would make sure that you did not buy more than you could afford. And if you did, or hit hard times, you would have worked really hard to repay the loan one way or the other. Now, with no community to guide this process, many people bought stuff they could not afford, and many are walking away from their situation with hardship, but without the guilt feelings that they would have had in their community in the past.

Another interesting assumption from the book – which I barely started reading – is that “there is a comprehensive, fundamental set of human wants which concerns control of other humans (and also escape from being controlled).” Now this explains way more than political buying decisions.

Very insightful…

I have been remiss at writing about a few good books I read in the past few months. My reading list is also desperately out of date…

One book which definitely should interest any marketing practitioner is a book by my good friend Lois Kelly, who also blogs on the Foghound blog.

The book – called Beyond Buzz, The Next Generation of Word-of-Mouth Marketing – is a great “how to” book with a ton of actionable ideas. The author does a great job clarifying the distinction between making meaning and making buzz. She also teaches you how to uncover interesting things about your company or product and turn them into “point of views” that people will want to talk to you about, she tells you how to organize customer listening tours, and much more. The book also provides some great frameworks and questionnaires to help you turn word-of-mouth strategies into actionable plans that will work, and not fizzle out or backfire, as many of them do.

Definitely a great book to have on your office bookshelf.

[Tags: marketing wom word of mouth marketing beyond buzz word of mouth lois kelly]

There is a new 5 “things” meme going around and I have just been tagged for it by Mary Schmidt. This time the idea is “thin-slice” a particular topic – a term coined by Malcolm Gladwell in his latest book Blink, and described as follows:

“Thin-slicing is a neat cognitive trick that involves taking a narrow slice of data, just what you can capture in the blink of an eye, and letting your intuition do the work for you.”

My task was to thin-slice a marketing plan – so here we go:

1) Do you really need a marketing “plan”?
Very often people just need to get out and engage with customers, prospects, influencers and connectors. There is no need for a marketing plan to do that. Often times marketing plans are just produced by marketing luddites as a CYA document. Granted, for some very large projects that involve large teams of people a plan can be useful – but more as a check-list than as a marketing roadmap.

2) Does the marketing plan show the addressable market being in the billions of dollars?
Any VC will scoff at these numbers – yet they won’t invest if it is not true. Don’t talk about the total addressable market, tell me how you will get your next 10 or 100 customers. Who are they, what do they do, where do they live, how will you reach them? Give me real life scenarios of potential customers and how you will help them solve their problem. Don’t give aggregate figures that have zero meaning.

3) Are you pretending or intending on being a leader in a category that nobody ever heard of?
Most companies I have worked with consider themselves the category leader in a category with one player – themselves. A category is recognized by others as a category and has other players in it. You can “create” a category, but you need help to create a new one – including help from competitors. Show me how you will create a new category, and who you will enlist to help with the creation? Show me how you will change the rules of the game in that category, how you will change the players or change their respective value as you enter the category – now that’s interesting!

4) Does your competitive review result in your company or product being in the upper right hand corner of some diagram?
Do I need to elaborate? You and everybody else lives there…it must be pretty tough to compete there. Show me where you are on the BS curve compared to others – that would be much more interesting…

5) What part of the plan deals with how you will deal with change?
The biggest danger with plans is that they become “bibles” – and once they are approved nobody can deviate from the chosen path. Yet most successful marketing programs are emergent in nature, they are like a jamming sessions…and so back to point 1) do you really need a marketing plan?

And now my turn to tag:

• Tara - how about engaging communities as part of your marketing plan?
• Pito – what about product plans?
• Jackie – how about word of mouth marketing plans?
• Chris – what about customer service strategies?
• Tom – what about brand strategies?
• [updated] I decided to add a 6th one as I care about PR and Europeans – Neville, what do you think?

[Tags: thin-slicing thin-slice marketing plan blink]

Here are two interesting and very unexpected things that I ran across this weekend…

First from the New England Journal of Medicine review of Love on the Rocks: Men, Women, and Alcohol in Post-World War II America on Amazon:

Alcohol has always had a special role in the United States. From 1620, when the Puritans were forced to land on Plymouth Rock because the Mayflower had almost run out of beer
(via Rageboy email)

Then next from Richard Dawkins’ new book – The GOD Delusion:

The Penguin English Dictionary defines a delusion as a ‘false belief or impression’. Surprisingly, the illustrative quotation the dictionary gives is from Philip E. Johnson (the leader of the creationist charge against Darwinism in the US): ‘Darwinism is the story of humanity’s liberation from the delusion that its destiny is controlled by a power higher than itself.’
(italic text was added by me)

Hilarious! The puritans running out of beer and the creationists calling a higher power a delusion!!!

Right on the heels of finishing Michael Crichton’s last book, NEXT – which deals with the future of genetic research – I read an article in Utne describing how a California company has developed a Hypoallergenic cat. You got it right – for $3,950 you can buy a genetically modified cat that does not produce the glycoprotein responsible for itchy eyes, sneezing, and hives. Note that for that price they will not guarantee that the cat will lead a healthy life.

Yikes…what’s next after that? Genetically engineered sharpshooters, genetically designed actors, genetically enhanced football players? How about genetically designed preachers? No that’s not going to work, those guys already think that they are the end of evolution…

Thankfully there are also good applications of genetic research such as this clinic that treats Anhedonia:

Or this one – where a company has preserved the gene for blondes – which are expected to become extinct in the next 200 years.

[Tags: genetic research genetic engineering genetic design genetic]